Apparently there are thousands of them living in the vast outback where no "physical" people live. They are mischievous, playing tricks on us all the time. Older Aboriginals say they remember seeing them. This is like the local people on the Indonesian island of Flores , where little people died out ten thousand years ago. Obviously, there is some truth in myth and living people really believe they have actually seen them.
There seems to be different types of Aboriginal pygmies and each lives in its own dimension of reality. It is fact that there were two types of Aboriginals on Bribie Island in Queensland and they didn't intermarry. One was tall thick set rather like Papua New Guineans. The other was shorter.
Myth has it that tall thin mainlanders moved down the coast to Groote Island and found little people living there. They interbred with them. However, a dispute arose and there was a great battle between them. The little people were completely wiped out. If this was the case there would be some unusual genes if present day Groote Islanders were tested. Skeletons of short, thin people have been found in caves on the island.
Little people are prominent in Aboriginal mythology. They act as spiritual intermediaries. As in the family religious tradition in China the "Mimih" society lives in the spiritual realm and is structured the same as physical people living today. This is hard to sustain given how technology has radically changed even Australian Aboriginals.
It seems Mimih did once live in the physical world. Over time they dwindled and left for the spiritual realm. It is possible for modern Aboriginals to wander into the bush, make contact them, stay and live with the Mimih. Aboriginal people tell you that the stick paintings on the rock are accurate representations of the little people who are very thin, so they can no longer live in the physical world because strong wind would break their bones.
Anthropology by Ty Buchanan